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South Australia gets straight to work on building upgrade finance

Building Upgrade Finance has only been available in South Australia for a few months, but two Adelaide buildings have already joined in on the action.

The 6000-square-metre YourDC data centre and 15-storey Angas Securities House office building have become the first projects to take advantage of the government’s Building Upgrade Finance (BUF) initiative, known in other jurisdictions as Environmental Upgrade Finance.

Financed through Eureka Environmental Upgrade Finance (Eureka EUF), the buildings will undergo major solar and efficiency upgrades, with the owner using utility bill savings to pay back the costs over a long-term period – typically 10 years – through council rates. The mechanism is designed to remove split-incentives (where owners pay for upgrades and tenants benefit) and ties the finance to the building, rather than the owner.

The YourDC data centre building upgrade agreement is a partnership between YourDC, the City of Salisbury and Eureka EUF.

The Edinburgh-based data centre will install a 199-kilowatt solar system expected to generate 290 megawatt-hours of electricity a year. Over its lifetime the solar is expected to cost just 4c/kWh, which is less than a quarter of the current rate being paid.

“This upgrade is cash flow positive from day one; it was an absolute no brainer for us,” YourDC chief executive Scott Hicks said.

“Data centres are one of the highest consumers of power per square metre and sustainability is very important to us. This program means that when the sun is shining our customers’ computers are running on solar.”

The Angas Securities House in Adelaide CBD, meanwhile, will install a 30kW solar system, an external green wall, LED lighting and a power factor correction system.

The building upgrade agreement is a partnership between the City of Adelaide, building owner John Culshaw and Eureka EUF.

“Through this finance mechanism, my project benefited from 100 per cent project finance, removing the need for upfront capital,” Mr Culshaw said.

“I’m committed to environmental leadership and taking positive action, and these measures are a great example of how commercial office buildings can reduce their energy use and bills through cost effective, sustainable measures.”

Eureka drew on finance provided by the Clean Energy Finance Corporation and NAB for the two projects, with the CEFC saying it had provided $153,000 towards the YourDC solar project, and $150,000 towards the Angas Securities House retrofit.

Eureka Real Assets managing director Bob Kelly said the company would like to see up to $100 million worth of projects funded in South Australia. It is currently is the largest provider of finance under state-based building upgrade finance programs, and funds across NSW, Victoria and South Australia.

South Australian climate change minister Ian Hunter said the projects demonstrated how building upgrade finance could unlock potential for local manufacturers and suppliers of clean technologies.

“These businesses are part of the economic transformation of our state to a high-tech future, underpinned by low-carbon technology.”

Adelaide lord mayor Martin Haese said it would help with the city’s carbon neutral goals.

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Comments

One Response to “South Australia gets straight to work on building upgrade finance”

  • Eli says:

    Are either of these buildings tenanted, or are they owner-occupied?

    If the latter, it’s important to note that EUF/BUF still doesn’t appear to have had significant uptake as a mechanism to overcome the split incentive, but rather as a way to address the barrier of high upfront costs by providing long-term finance aligned with the energy savings.

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